On August 30th 2018, the Federal Court of Appeal rendered its decision in respect of Kinder Morgan’s (perhaps now Canada’s) proposed expansion of the Trans Mountain Pipeline by quashing the federal government’s approval of the project. Before commenting on potential impacts on the case, it’s important to see what the case actually decided and clarified.

The decision was a result of several judicial review applications from many applicants and respondents rolled into one decision. The two main questions before the court were:

1. Was it possible to conduct a judicial review of the National Energy Board (“NEB”) Report? Answer: No, it is not (citing the Gitxaala decision of the Federal Court of Appeal aka the “Gateway Decision”). Therefore, the applications sought by Tsleil-Waututh, Squamish, Sto:lo, Coldwater, Upper Nicola and Secwepemc Indigenous Groups/Bands and Nations along with the cities of Vancouver and Burnaby and environmental group applicants and interveners were dismissed on this point. However, in reviewing the Order in Council (“OIC”) of the federal Cabinet, the court could look at NEB conduct and consider whether the OIC was valid.
2. Can the OIC approving the Project be judicially reviewed and challenged, and if so, should the OIC be quashed? Answer: Yes and Yes. The court quashed the OIC and sent the matter back for reconsideration after ordering further consultation and accommodation discussions with Indigenous Groups, insisting on the widening of the scope of review for the project to include shipping and therefore include consideration of aquatic species at risk such as killer whales and corresponding impacts on Aboriginal rights.

So what happened? In a nutshell, the court clarified the law and the Environmental Assessment and NEB process, while mandating a wider review and further, more “adequate”, First Nations consultations.

First, the court clarified the NEB and environmental assessment process by following the Gateway Decision in stating that the NEB review process is sufficient to help fulfill the role of consultation for Canada in reviewing and assessing the impacts on Aboriginal rights and the duty to consult and accommodate.  Second, the NEB’s ‘approval’ and report is not the last word and cannot be reviewed through the courts because its decision and report are precursors to the real decision maker, being Canada by Cabinet decision and an OIC.

These two aspects of the decision clarify the role of the NEB and Cabinet in future project reviews.

The Federal Court of Appeal found that the NEB and Canada got the process and their mandates wrong. The NEB construed the scope of its review too narrowly and Canada failed to adequately consult. While Canada listened well enough, it did not meaningfully interact to discuss, consider and mandate accommodations to address the concerns of First Nations and their impacts on Aboriginal rights.

The court held that the NEB made a critical error in not making the “scope” of review of the project’s impacts sufficiently wide to consider project-related tanker traffic and shipping. Both the NEB and Canada erroneously thought that the NEB and Canada had no jurisdiction to consider these aspects of the project and accordingly, they narrowed the scope of their review to exclude serious concerns regarding species at risk legislation. On reconsideration, the NEB will have a great deal of work to do on that front since there was little evidence referenced in the decision as to how the project changes may mitigate the potentially serious impact on the killer whale population, which is a species at risk and one of significance to local First Nations. As a result of this narrow “scope” decision, the report of the NEB was seen as deficient and not a valid report required for an NEB approval certificate for a project.

Furthermore, the court held that Canada did not sufficiently or adequately consult with affected First Nations. More specifically, the process for consultation laid out by Canada was reasonable and adequate but the actions of Canada to fulfill Phase III of its own process fell short. Canada was required to engage in a meaningful two-way dialogue. The court spent some 36 pages in its decision detailing the inadequacy of Canada’s dialogue with First Nations, culminating in the following statement:

“The inadequacies of the consultation process flowed from the limited execution of the mandate of the Crown consultation team. Missing was someone from Canada who would engage interactively. Someone with the confidence of Cabinet who would discuss, at least in principle, required accommodation measures, possible flaws in the Board’s process, findings and recommendations and how those flaws could be addressed.”

The court held that Canada appeared to be under the misunderstanding that its role and jurisdiction was limited to listening only to First Nations concerns but did not reference two-way dialogue or decision-making about actual project changes, or conditions to address or accommodate those concerns. It also appears that it may well have considered the NEB as the ultimate decision maker, with Canada merely echoing the NEB’s findings.

The court also clarified the role of the “public interest” in the process. The court determined how the conflict with the “public interest” referenced in an NEB review and the duty to consult is to be resolved: aboriginal rights considerations are a “constitutional imperative” and “supersedes” other concerns of tribunals tasked with assessing the public interest:

“… it is important to understand that the public interest and the duty to consult do not operate in conflict. As a constitutional imperative, the duty to consult gives rise to a special public interest that supersedes other concerns commonly considered by tribunals tasked with assessing the public interest. In the case of the Board, a project that breaches the constitutionally protected rights of Indigenous peoples cannot serve the public interest (Clyde River, paragraph 46).”

The Court quashed the OIC, sending the matter back to the NEB for review and reconsideration, on the expanded scope and in further consultation with Indigenous Groups, mandating that Cabinet could not consider the matter until after Canada had adequately engaged in that meaningful two-way dialogue which included accommodation of aboriginal rights and title concerns.

Implications:

1. First Nations consultations must bear practical fruit with substantial decisions for meaningful changes. Talk is not enough. First Nations “consultations” will need to be two-way dialogue and include actual accommodation discussions, if not actions, in order to be consultations, especially where the duty to consult is on the high end of the spectrum. This will spawn a new cast of federal “negotiators” armed with a mandate directly from Cabinet to discuss and seek adequate accommodations and addressing First Nations issues. This will occur outside and after the renewed NEB process in a newly created “Phase III” consultation. This may have further reaching applications to other EA Processes where Cabinet decision makers are required to engage in two-way dialogue after an EA process has recommended approval to the appropriate Minister. In that sense, government to government dialogue, long sought by First Nations, has come of age.
2. Canada is the final decision maker but must address aboriginal rights, complying with the “constitutional imperative”. The balance of power in regulatory decision-making on large-scale energy projects has shifted away from the NEB’s previous ‘final word’ and is now with federal Cabinet. Canada now has legal and procedural steps mandated by the courts for decisions that can be reviewed. This will heighten the politics of these projects, especially where key Cabinet leaders have already expressed project support, giving rise to claims for apprehension of bias. The “constitutional imperative” to Indigenous Peoples is now infused with a “special” public interest, obligating the fulfillment of the duty to consult in order to serve the public interest. This will result in a thorough review of existing environmental assessment and NEB processes throughout all Canadian jurisdictions.
3. NEB process is sufficiently robust to review and consider the various issues of environmental and Aboriginal rights including the duty of consultation and accommodation. Canada can delegate the procedural aspects of consultation to the NEB. While the NEB is not a final decision maker, it does have sufficiently wide powers of review upon which Canada (through federal Cabinet) can rely in making its considerations and final decisions.
4. EA processes and consultation will be more heavily scrutinized by government, First Nations, and project proponents. Project proponents will need to take the NEB and EA processes much more seriously, especially as to how they address First Nations concerns. Proponents will no longer be able to rely solely on the approval of the NEB for adequate assessment or on Canada for adequate consultation. This could result in an increase in Aboriginal engagement for major projects, especially where project alterations and/or accommodations are sought as a result of impacts on aboriginal rights. Project proponents will be required to do more out of an abundance of caution.